The Shrinking £, The Invisible Man, The Disappearing Village

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Ann Tonks, Director, Chapter Restaurant discusses the impact of the increases in hospitality and how venues are closing.

This article was written for the Birmingham Economic Review, published in September 2023.

The review is produced by City-REDI / WMREDI, the University of Birmingham and the Greater Birmingham Chambers of Commerce. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions.

Hospitality is facing an existential crisis. The impact of soaring cost increases, recruitment difficulties and the challenging trading environment makes survival for most of us questionable. These 3 issues combined are unprecedented in our 20 years of experience of running restaurants. These issues follow hard on the heels of a pandemic which has been devastating for our industry. There was no period of recovery from one disaster before the next one came along.

Over 12 hospitality venues are closing every day throughout the UK. Our independent sector is particularly vulnerable as we are rarely big enough to harness significant buying power or access funding to ease cashflow challenges. Healthy cash flow is necessary not only to enable investment but also for survival. 

Without significant support for our sector, the impact of the eye-watering costs and a lacklustre trading environment will lead to further mass closures. 


At Chapter, over the past 17 months energy costs have increased by + 68%; food prices increased by + 22% and are still rising. Our costs increased by over £120,000 in twelve months just to buy the same goods and utilities.  

This puts extreme pressure on cash flow. Unable to obtain any commercial loan or re-financing, we have raised capital by issuing more shares in our company and have extended a number of personal interest-free loans. We do what we have to do within our capabilities. 

We need the government to recognise that help is essential to our sector. We suggest a simple but highly effective 2-point plan for hospitality that is fair and easy to implement: 

  • Remove VAT on food sales (equalise with grocery stores); 20% VAT on food sales is unjustifiable. Allowing venues to retain more of our sales eases cashflow substantially while reducing our pressure to increase prices, helping to stem inflation.  
  • Maintain the 75% reduction in business rates applied to hospitality since April while a full re-assessment of the inequitable rates system (promised for years but never delivered) is worked out. 


There is much talk about the hospitality industry being unskilled, hence is not a priority for the government – we’re seen as ‘just a service industry’ and are hugely undervalued.  

To manage a financially successful independent business is a skilled job. To manage, motivate and train staff is a skilled job. To deliver fresh quality dishes, chefs need to be highly skilled and training is essential.  

The Chapter has a successful hybrid of recruiting young chefs attending the College of Food on day release while working in a kitchen supervised by highly skilled chefs teaching butchery and other developed skills. However, talented and well-trained kitchen staff at a senior level are almost impossible to recruit.   

Much has been done by the industry to improve the social hours and rewards for people in hospitality. But there must be a reason for talent to remain in Birmingham. Infrastructure investment in public transport, affordable housing and the region’s cultural richness are essential to make Birmingham the most attractive city for young professionals in all types of industries to live and work.   

Trading Environment 

The trading environment is severely depressed. 

The continuing high cost of living and the constant drip feed of rising interest rates is a sucker punch to consumer confidence.  

Offices are still only partially full and some days are empty altogether.  

Train strikes, particularly at key dates in the year, lead to booking cancellations and customers staying at home.  

Confidence is key to success but the UK is sorely lacking in any kind of credible fiscal policy that encourages sustainable growth. To generate growth we need a re-think and long-term planning with a very clear idea of what success looks like.  

The value of our industry to the economy and the community cannot be underestimated.  

A restaurant like ours, backed by local investors, sourcing produce through local suppliers, and training staff contributes directly to the region’s economy. 

The knock-on effect of restaurants failing is huge and rebounds on communities affecting staff, suppliers, and customers. Retail and hospitality venues sit cheek by jowl-and if one fails, the other tends to follow. The tragedy is seeing the closures on our high streets damaging the economic and social ecosystem of cities and neighbourhoods.  

We are crying out for the recognition that:  

  • The success of the hospitality sector matters.  
  • Lively city centres and neighbourhoods with a buzz and thriving commerce matter. 
  • The joy and social benefits of community success matter. 

It takes courage for independents to open in the current climate. Restaurants and bars providing social spaces are part of the culture of the city. And a city/region/country that emphasises the strength of a culturally rich ecosystem will succeed.   

Otherwise, let’s all just order takeaways and work from home.

This blog was written by Ann Tonks, Director of Chapter Restaurant.

The views expressed in this analysis post are those of the author and not necessarily those of City-REDI / WMREDI or the University of Birmingham.

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